TT-950 -- Island Revitalization - The Challenges Are More Than Just Cash, ebiz news from Japan

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, Jun 24, 2018, Issue No. 950

- What's New -- Island Revitalization - The Challenges Are More Than
Just Cash
- News -- Takatsuki school knew about danger of collapsed wall
- Upcoming Events
- Corrections/Feedback -- Airbnb "for and against" feedback
- Travel Picks -- Climbing Mt. Fuji, Hokusai Museum in Sumida
- News Credits

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+++ WHAT'S NEW

Island Revitalization - The Challenges Are More Than Just Cash

Earlier this week the Hiroshima Prefectural Board of Education announced
that it would open an International Baccalaureate school serving local
middle and high schoolers, not just expat kids, partly in English. This
is a pretty radical step for such a regular part of the country, and it
surprised us that the education ministry would allow it. Construction
will be completed next Spring and it will be interesting to see if the
school gets the student sign-ups they are hoping for - because once
families allow their children to attend an IB school, that pretty much
closes the doors for those kids with national standard exams and thus
acceptance into large Japanese firms and government jobs.

The Hiroshima Global Academy (HiGA) is an effort by Hiroshima to address
its ebbing economy by effecting deep changes in the education system and
internationalizing its kids. This long-term thinking is refreshing to
see - especially given the increasingly short-termist and pessimistic
outlook about the nation's demographic decline. We definitely agree with
the Hiroshima education board that Japan's current malaise begins in the
schools and the teaching of risk aversion and conformity. If it takes a
bunch of Japanese teachers trained overseas (along with some foreign
teachers in a couple of years) educating local kids in international
best practice, then this is a brave and meaningful first move.

The HiGA school hasn't said whether the courses will culminate in the
kids being able to choose between IB and standard Japanese exams (or
just do IB), but it does seem to be hedging its bets. Apparently the
core subjects, including mathematics, social studies, and science, will
still be taught in Japanese, while art, phys-ed, and after-school
activities will be in English. Perhaps more importantly, the HiGA school
will be accessible to any child at any socioeconomic level, which
definitely is not the case with the other 58 IB schools in Japan. Most
of those are elite schools for expat kids and more recently (since the
education ministry seemingly relaxed its rules about 7 years ago), kids
of rich and celebrity Japanese.

The back story for the new school is that it is part of an intensive
revitalization project. The JPY7bn campus is being built on
Osakikamijima, the largest of a group of islands that form a borough off
the coast of Hiroshima, in the Seto Inland Sea. This is an area well
known to us, as Osakikamijima is the next island over from Omishima - of
Shimanamikaido cycling course fame. The weather is temperate, the
sunsets spectacular, and you're more likely to find blueberry and oyster
farmers there than cars and office workers.

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[...Article continues]

Like most of rural Japan, Osakikamijima has been suffering a substantial
population decline, which is now just 7,646 residents versus 14,000 in
1985. Almost half of the locals are 65 and over. The HiGA school is an
obvious attempt to rebalance the population, and no doubt the Hiroshima
governor hopes that some of the kids graduating from the school will
like the island well enough that they decide to stay there, while others
will go on to bring foreign firms to the general area. Certainly there
will be many other local governments around the country who watch the
experiment and see what kind of effect it has.

Revitalization is of course a major topic in Japan these days, with a
precipitous drop of workers and tax revenue predicted over the coming 20
years (through to 2040). The government has made some effort to start
moving funds to regional revitalization projects, allocating as much as
JPY100bn in FY2016. But the reality is that across 47 prefectures, this
amount is inadequate to do anything significant, as the HiGA project's
JPY7bn cost clearly shows. The government says that it can't allocate
more funds because of the nation's already sky-high public sector debt,
and that local authorities need to find another way forward.

An expert in regional revitalization, Kinoshita Hitoshi, reckons that
the answer lies with a multi-pronged approach focusing on property
improvement. An interview with Kinoshita by Nippon.com has him giving a
number of examples on how public land and facilities have been
successfully turned into productive revitalization projects by opening
the facilities to private investment, using the resulting rent to fund
each facility itself. His experience has been that if you seed a
property or facility with interesting start-ups, this creates a
satisfying new experience not only for the local community but for
visitors from other regions as well.

http://bit.ly/2tyfcsT [Kinoshita article in Nippon.com]

As we read the Nippon.com article, though, we can't help feeling that
Kinoshita's approach is still short-sighted, in that if his projects are
successful, all they are doing is pulling visitor traffic from one
location to another, revitalized, location. In other words, "Robbing
Peter to pay Paul." Instead, we believe the real answer to national
revitalization is to increase the population of visitors overall, which
means either getting Japanese to have more kids OR, bringing in more
foreigners and injecting new blood to get the demographics moving again.
The more Japanese kids solution is definitely more acceptable to the
xenophobes in government and local communities, and this appears to be
the motive force behind the HiGA project.

Still, JPY7bn for one little island does seem to be an extravagant use
of tax-payer money when compared to the efficiency that increasing the
population of Japanese-speaking foreigners would create. For many
foreigners, already here as full- or part-time students, life is
generally better than back home and so they face their futures in Japan
with a more positive and risk-taking view. This same phenomena has
worked to great effect in Silicon Valley, with all the foreign
entrepreneurs there.

Actually, revitalization of island communities is a very relevant topic
for us. For almost a year now, we have been part of an effort to
revitalize another island in the Seto Inland Sea, Awajishima, located
just south of Kobe. Awaji Island has a population of about 150,000
people, down from almost 400,000 twenty years ago, and apparently 1-in-3
homes on the island is vacant. This is an urban/rural area that clearly
needs revitalization and currently most of the 1,000+ secondary school
children there are expecting to have to leave the island to attend
university then find a job. If the last 20 years is any yardstick, very
few if any of these kids will come back to Awaji to settle down in the
future.

There are a number of efforts by private business people to invest in
Awajishima, both in real estate and business, and while local senior
civic leaders are welcoming of any firm wanting to build or refurbish
properties on the island, there is unfortunately a pervasive negative
attitude by locals that can best be described a cross between envy and
fear of outside investors. In other words, they feel they are either
being taken advantage of while their economy is down, or that the
outsiders are too brash and pushy. Think carpetbaggers.

This phenomenon of push-back by local communities who should otherwise
be grateful for outside interests willing to plow millions of dollars
into their neighborhoods is of course well-known in other revitalization
projects around the world. One way to deal with this kind of push-back
is to just ignore it, buying whatever resources are needed, and bringing
in customers and suppliers from outside so as to bypass local
obstructionists. In Japan, large resort developments have typically
taken this approach - paying lip service to the local community, all the
while pushing ahead with local government approvals - sometimes greased
with under-the-table payments. As a result, those same resorts wind up
being largely divorced from the communities they are part of.

Another way, and one which is being tried by one major business group on
Awaji, is to retain control over its own operations, but at the same
time launching NPO efforts to reach out to the community and win them
over. This is time-consuming and expensive, but it does have the benefit
that if traction is gained with the locals, such that they themselves
start to believe in the opportunity, then by virtue of sheer numbers of
people investing time and energy, the project takes on a life of its
own. In other words, a much more scalable approach.

During the course of this particular revitalization project, it has been
fascinating for us to see the illogic of local community opinion leaders
(not the elected leaders, who generally do get it), who see change as a
threat. For them, a large outside investor coming into their town
represents someone trying to steal their existing customer base, not
someone contributing a bigger pie by drawing in more outside visitors.
Then there is the jealously factor, where local operators naturally
resent someone who has the advantages of big-city connections and
funding, even as they have to slave away with no help or interest from
their own resources-starved community.

Yes, it's hard to undo these negative feelings, and sometimes it's so
frustrating that you simply have to walk away and wait until the
anti-development stalwarts get too old to be of concern. As a good
example of this approach, in building the Mori Tower, the Mori Building
Company spent about 30 years negotiating with hundreds of small
landholders to secure the building site. In many cases, it simply waited
out the existing owners until they died, and as the rapidly expanding
vacant blocks of land appeared in the 1980's and 1990's (the tower was
completed in 2003), those owners' heirs started to realize that holding
out further would not improve the resale value of their inherited
properties and eventually they capitulated.

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-----------------------------------------------------------

+++ NEWS

- Takatsuki school knew about danger of collapsed wall
- Court orders Mt. Gox JPY100bn to go to bitcoin owners
- Japanese fans happy to hold on
- Sony rewards ex-CEO with JPY2.7bn package
- Fujifilm sues Xerox

=> Takatsuki school knew about danger of collapsed wall

It will be interesting to see if negligence charges are brought against
the school board governing the Juei Elementary School in Osaka,
following revelations that they were informed by a disaster assessment
expert 3 years ago that the swimming pool wall that collapsed and killed
a 9-year old student in last week's earthquake, was dangerous. According
to the expert, he told them in 2015 that the 3.5m concrete block wall
was substandard and should be dealt with. The reaction of the school?
They had board staff visually inspect the wall, tap it with a stick, and
judged in their own opinion that the wall was safe! Apparently there are
15 other schools with similarly unsafe high walls. ***Ed: Classic case
of where expertise is trumped by habit and status quo. This case reminds
us of the uranium mixing incident at Tepco's Fukushima plant in early
2011, where the mixing was done in a metal bucket for expediency and two
workers died from radiation exposure as a result.** (Source: TT
commentary from japantimes.co.jp, Jun 22, 2018)

http://bit.ly/2lsVfQO

=> Court orders Mt. Gox JPY100bn to go to bitcoin owners

The bitcoin holders who thought they had lost their savings with the
collapse of the Mt. Gox bitcoin exchange in 2014 have had some joy this
last week, thanks to a court decision in Japan to stay bankruptcy
proceedings against Mt. Gox until the considerably appreciated remaining
assets are liquidated to return funds to the customers. When Mt. Gox was
hacked to the tune of JPY50bn coins, it had just 170,000 coins left in
inventory. Luckily for all concerned, these remaining coins have
appreciated sufficiently in value that a payout of up to JPY120bn can
now be made. ***Ed: In the meantime, Mt. Gox ex-CEO Mark Karpelès is
still on trial, although free until a judgement is delivered.** (Source:
TT commentary from pymnts.com, Jun 22, 2018)

http://bit.ly/2MVYcpp

=> Japanese fans happy to hold on

Stoicism at work is not the only expression of perseverance by Japanese
salarymen (and women). Apparently they can hold on for toilet breaks as
well. A quick review of the Tokyo Metropolitan Government Bureau of
Waterworks water usage data shows that during the Japan-Colombia game on
June 19th, that fans avoided using their bathrooms during both halfs.
During the first half, water usage fell 20% before spiking back up
during intermission, then fell by 40% before the final whistle. ***Ed:
Check out the graph accompanying this article.** (Source: TT commentary
from nippon.com, Jun 22, 2018)

http://bit.ly/2K3WAfr

=> Sony rewards ex-CEO with JPY2.7bn package

After helping boost Sony to a record operating profit last year, the
company's board has awarded retiring CEO Kazuo Hirai a record JPY2.7bn
in cash and stock. Hirai took over Sony in 2012 as the company was going
through a financial crisis that was severe enough to make many investors
wonder if it would survive. Hirai understood that digital sales and
subscription revenue would be the key to the future and pushed ahead
with reorganizing Sony's efforts and investments to this end. As a
result, the FY2017 operating income rose a massive 250% from last year,
to US$6.79bn. ***Ed: This was probably a 50x lower reward than would
have gone to a U.S. CEO for a similar result - one of the strengths of
Japan Inc.** (Source: TT commentary from asia.nikkei.com, Jun 20, 2018)

https://s.nikkei.com/2tFzNvJ

=> Fujifilm sues Xerox

Fujifilm has filed a lawsuit against Xerox corporation for US$1bn,
charging Xerox with unreasonably caving in to the demands of two minor
shareholders who want Xerox to demand a higher price for their merger
with the Japanese company. The merger was scrapped after activist
shareholders, Carl Icahn and Darwin Deason were successful in getting
rid of the Xerox CEO and installing several of their own directors on
the board. ***Ed: It's easy to see the frustration on the Fujifilm side,
given that they have played a fair and reasonable game with Xerox over
the years in assuming control of the two companies' joint venture firm,
even as Xerox has been ailing. Also, despite Icahn's reputation, this
may be a death knell for Xerox.** (Source: TT commentary from
reuters.com, Jun 19, 2018)

https://reut.rs/2yD9Wds

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.

***------------------------****-------------------------***

+++ UPCOMING EVENTS

Alishan 30th Anniversary!

Join us for our 12th annual Food Carnival and 30th Anniversary base, to
be held at the Alishan Organic Center. Whether it's a family day out or
a first date, a market can be the best way to spend a warm summer day
surrounded by lush green nature and live music. Just a train ride from
the city center, you can sit back and relax and immerse yourself in the
fresh air. Numerous workshops are planned throughout the day from a Bean
to Bar workshop to an easy guided hike on Hiwada mountain. You can also
enjoy a bite to eat at the authentic food and farmers market, as we
celebrate this year with the theme of "Beans" and introduce various
vegetarian dishes brought to you fresh from our kitchen.

When: Saturday, July 14th from 10:30~16:00?Rain or Shine!
Where: Alishan Organic Center
Address: 185-2 Koma hongo, Hidaka-shi, Saitama, Japan (042-982-4823)

More info: https://goo.gl/DB9Ty7
***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

=> In response to our TT-949 story about Airbnb's failure to properly
anticipate and manage the removal of hosts and properties from their
Japan site, two readers give us insider feedback. One for Airbnb, and
one critical of them.

*** Reader 1: A client of mine (a traveler) has had bookings with three
Airbnb listed properties in Hokkaido for September. I am to be traveling
with him so the fiasco affects me also. Airbnb had not notified him of
the problem. It was only through your TT email that I became aware of it
and I advised him.

I logged an inquiry with Airbnb yesterday (I am also a host here) and a
Sydney office rep called to advise that we should first enquirer with
the host to check if they are going for a minpaku license. If they are,
but are not successful by July, we're to contact Airbnb again to obtain
a refund plus complimentary travel coupon to the value of the booking
plus a US$100 Airbnb experience voucher.

Why Airbnb had not even sent a bulk email to my client yet, the rep
could not say...

I am not optimistic that hosts in Japan will get the license as readily
as hoped, judging from what I have read on Airbnb community Forum.
Especially non-Japanese hosts who report unachievable requirements
because of not being Japanese nationals. One host in Kansai reported
that they'd been managing around 6 properties including their own
property in Nara, and had started the process to register some time ago
and still haven't succeeded. They no longer have any properties they can
let.

*** Reader 2: I was employed by an illegal minpaku in Edogawa and,
frankly, wish that Booking.com would also delist everyone who hasn't
registered as well. Personally, I don't fault Airbnb. The process and
rules regarding minpaku in Japan are a mystery wrapped in an enigma.
Have you seen www.mlit.go.jp/kankocho/minpaku? And this isn't even for
the local municipalities! For the xenophobic Japanese, the surge of
aliens staying overnight under different names and nationalities from
those they made the reservations under, has to keep them awake at night.

For what it's worth, I think the whole area of Airbnb rentals being
conducted in unlicensed apartment units and condos has been far worse
than reported. For example, I ran across one this morning with about 50
units in a huge condominium complex - a defacto binbo/furosha hotel!
When I see places like this, I believe the liability to Airbnb isn't
isolated murders here and there - no, it's the risk of a major fire.
Unfortunately there is no way for the government to police or enforce
regulations unless they hire a lot more people.

Also, the whole concept of having trained hosts is bizarre. In reality,
many of the guests are coming from developing countries and show up at
their rentals at all hours, often, as I mentioned before, with different
names, different guest lists, more people than booked, and whole
families arriving after 10PM. This forces a host to stay up until after
midnight waiting, waiting, waiting... Not fun at all.

***------------------------****-------------------------***

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-----------------------------------------------------------

+++ TRAVEL DESTINATIONS PICKS

=> TMt. Fuji: A Day-trip Climb
This is your year to reach the summit!

Is this your year to conquer the iconic Mt. Fuji on a day trip? Well,
maybe my story will help you make up your mind. Or maybe it will conjure
up the desire for you to climb it again! Either way, the official
climbing season is just around the corner - beginning July 1st and
running through to August 31st. I am here to tell you that even though
it took every ounce of my energy to reach the summit, it was worth every
strenuous step. A memorable experience that brought a great sense of
accomplishment!

Known for its perfectly cone-shaped volcano, Mt. Fuji was granted UNESCO
World Heritage status on June 22, 2013. This new status has brought many
more like-minded hikers from near and afar, wanting to achieve the
summit at 3776 meters high. Whether you decide to hike during the week,
when it's least crowded, or on the weekend when longer lines are formed
for walking-stick stamps and it's bumper-to-bumper as you traverse up
the chain railed rocky mountain, you must come prepared.

http://bit.ly/2Il58Ji

=> The Sumida Hokusai Museum
Creating ukiyo-e waves in Tokyo's Ryogoku district

The Sumida Hokusai Museum is dedicated to world-renowned ukiyo-e artist,
Katsushika Hokusai (1760~1849), located in the same Ryogoku area of
Tokyo where Hokusai was born and spent much of his life. Newly opened in
November 2016, this dedicated showcase celebrates his life's work and
provides an in-depth look into all things Hokusai.

Before even stepping inside, visitors will be awe-struck by the
contemporary look building, designed by Kazuyo Sejima (a Pritzker
Architecture Prize winner) to be approachable from all sides of the
angular, towering structure. It will surely become as important an
architectural landmark for Tokyo over the years, as Hokusai became known
for his ukiyo-e masterpieces.

The museum houses a permanent exhibition on the 4th floor, where you can
learn about Hokusai's life, including the local area in Sumida where he
grew up and lived his life. Multi-lingual touch-screen panels help
provide an interactive, detailed insight into Hokusai's world whilst
high quality replicas of his life's work adorn the walls.

http://bit.ly/2Ki2Z3b

***------------------------****-------------------------***

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+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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